Legal fees are a big obstacle to estate planning. Here are the most common ways that estate planning attorneys bill and how these methods may hurt your planning.
1. By the hour. This is one of the most common ways that attorneys charge for their services, so how can it cause problems for your estate plan?
Picture this scenario. Your new estate planning attorney says he wants to be thorough with your estate plan. After each meeting, he tells you to call anytime to discuss additional thoughts or questions that may arise. But each time you call, you get a bill two weeks later for 0.2 hours at his hourly rate. How likely are you to keep calling? Even if you have important questions or vital changes to your plan, you may forego the call for fear of the bill you will receive. That means your plan will not be at its best when the time comes for it to be implemented.
2. By the document. Many people (both lawyers and “regular people”) think of estate planning as selling documents. The attorney says I will charge you so much for a will, so much for a trust, this much for a power of attorney, etc. only charging you for what you need from their legal menu. This may seem like a really good idea, one which could potentially save you money, but in estate planning, every family is different — different assets, different concerns about the children, different timelines, different goals and different values. No two plans should ever be the same. To say a “will” is so much, regardless of the situation, may mean you are getting a form document that is not customized to your family’s situation.
3. The attorney is not up front with you about his fees. Let’s say you and your spouse hear about an attorney and make an appointment. You really like the guy and decide to go ahead with an estate plan, but no one discusses the fees. You don’t ask because it’s kind of awkward, and he doesn’t volunteer anything about what it will cost. So as you are talking with the attorney about very important issues (everything you own and all the people you care about), there are some questions in the back of each person’s mind distracting them from the process.
You are thinking, “What is this going to cost?” And the attorney is thinking, “I hope the clients are realistic about what this will cost.” What are the odds that you and the attorney may have different ideas about a proper fee? When each party has a different assumption about the fee, how do you resolve it later? And is your plan impacted because part of your brain (and the attorney’s) was occupied thinking about fees during important discussions?
4. The fees are too high. Of course, I had to include this one, because sometimes attorneys do charge too much. However, the real issue is the value you receive. If the attorney’s process and experience leads to a plan that works, and gives you peace of mind, then what is that worth? Or, we could ask, what will it cost if my plan does not work right? What will be the impact on my family? If all you are getting is a form document with the blanks filled in, then even $50 is too much and you are not getting a good value. On the other hand, if you receive a customized plan from an attorney who knows and cares about you and your family, with a process in place to maintain your plan over the years, what is that worth in peace of mind?
5. The fees are too low. How can a low price be a bad thing? Would you buy the cheapest car seat for your child? What about a used car, would you buy the least expensive knowing it would be carrying and protecting your family on the interstate? If your grandchild needed life saving surgery, would you find a Third World country with the cheapest medical procedures?
All estate planning involves is everything you own and everyone you care about. That’s all! Should you use one of the cheapest options for that?
You should ask yourself – what are you paying for when you hire an attorney? Sometimes you are paying for a form document with the names filled in. Sometimes you are paying for more than that, though. You are paying for the attorney’s expertise, time, energy, experience, procedures and staff. All of these combine to help you create a holistic and effective plan that will benefit your family long after you are gone.
If your attorney charges a very low fee, what does that mean? It could mean either your attorney has little expertise in estate matters or else your very qualified attorney is spending very little time and energy on your plan. (Or it could mean the attorney is a relative of yours!) Assuming the attorney is not your son or nephew, then the cheapest attorney may not be the one for you.
Read how pricing works at Edwards Group HERE.